Saturday, June 11, 2011

Perspective: What Stymies Job Creation

I swear it would take a colonoscopist to find the heads of our government! The economy is stagnating, the true jobless rate still hovers around 15%, and there are stories after stories of persons 50 and above who have been diligently searching for jobs for a year or more. And, with the exception of those who majored in science or engineering, it is a rare college graduate who has found a job in the field of their major.

Meanwhile, the business press is full of stories of companies being lured to other countries with all kinds of incentives while there are virtually no incentives offered by the United States. In fact we have the second highest tax rate in the industrial world. It is an outrage and embarrassment that the United States at this moment is second from the top of the least business-friendly countries in the industrial world. Moreover, our government does everything you can think of to increase uncertainty for the investor for whom uncertainty is anathema. In fact, both our President and democrat members of our Congress berate industrialists at every turn. Under these conditions investors have reasons to do nothing. That is what they are doing, NOTHING, while trillions of dollars of capital sit on the sidelines.

A new book entitled, “Make It in America” by Andrew N. Liveris, Chairman and CEO Of The Dow Chemical Corporation, spells out the problem and offers solutions as he makes the case for “Re-inventing the Economy”. I recommend this book because the author states clearly what US manufacturing is up against in this new global economy. Global competitors offer manufacturing businesses incentives such as free land, low tax rates, rapid right offs, sharing in the capital investment required, long term loans at low fixed interest rates and clear and long-term regulations that can be counted upon. The US offers none of these. This is terrible, because it is not cheap labor that is driving companies to locate in foreign countries. US labor is very efficient and quite often their productivity offsets the low cost of foreign labor.

At the very beginning of his book Liveris describes a situation that should be so embarrassing to our leaders, that each should publicly apologize and volunteer to leave office at once. My readers are aware of Amazon’s electronic book, Kindle, invented a mere four years ago. It and its competitive counterparts will doubtless destroy the entire book industry from publisher to book printers to book stores to our libraries themselves thus eliminating thousands of jobs. Already Amazon is selling more down-loadable books than paper ones, and Borders has declared bankruptcy. You would have thought that this might have caught the attention of our leaders and the Media who might have wanted to know that thousands of jobs are in jeopardy because of some new-fangled device. Maybe they might even have wondered where the new electronic book would be manufactured.

Liveris tells us that the Kindle was created in a secret lab in Silicon Valley in 2007. The key was an innovative electronic ink, which, unlike the pixels of computer screens, needs no illumination. Thus the simulated printed page can be read in direct sunlight. Amazon partnered with a company in Massachusetts called E-Ink which was started by researchers at MIT, but E-Link did not have the technology to build the screen similar to that used for LCD television screens because the manufacture of such television screens had moved overseas.

So, when Amazon could not, repeat could not, find a manufacturer located in the United States. They settled on Taiwan. The Taiwan Company subsequently bought E-Link and moved it from the US to Taiwan.

You got it! Yes, a device that will replace thousands of United States jobs associated with the cutting of trees for pulp, making pulp to paper, printing the paper with ink made in the US, binding the books, selling the books and placing them in physical libraries all in the USA, will be replaced by a product made in Taiwan and sold to US readers who will download books from the comfort of their homes.

Interestingly, the Department of Commerce has a mission statement which says in part: “To promote Job Creation by promoting U.S. competitiveness in the global marketplace”. Does anyone recall reading anywhere that someone from this Department has the responsibility to determine what our country has to do to enable our capitalists to become competitive in the new global economy! What is the sense of having an expensive Department to promote global commerce and job creation if they don’t know about this issue, don’t know what to do, or worse, much worse, don’t care?

If you are not absolutely outraged by this, you should be. All of our “so-called” leaders had to do was work with Amazon to find a way to make manufacture of the Kindle economically feasible in the United States. That way at least some jobs would still be in this country. BUT NO !!!

In this horrible economic climate, our leaders are spending all of their time fussing about the out-of -control entitlement programs of Medicare, Medicaid and Social Security, universally accepted as the cause of our sky-rocketing debt. The Republican plan, proposed by Representative Paul Ryan, is already being demagogued by the President and the Democrats. Have you seen that outrageous ad showing a look-a-like Paul Ryan pushing an old woman in a wheel chair over a cliff? Compare that to the blast Sara Palin received when she properly noted that Obamacare would require “death panels”. This is the third time we have seen Republican efforts to reign in entitlements demagogued by the Democrats. The first was in the nineties when the Republicans proposed to slow the growth of Medicare. The second was in 2005 when George W. Bush proposed a plan to control Social Security, and now the Ryan plan.

Nothing meaningful is going to be done about entitlements with this democrat in the Whitehouse and a democrat controlled Senate who both think that the answer is to tax the rich. Hasn’t anyone noticed that the rich are leaving the country to take their businesses overseas to “business friendly” countries such as China, Brazil, South Korea, and even Europe. Without capital investment in the United States, only made possible by the so-called rich, there will be no jobs for ordinary US citizen tax payers. Without jobs they will not be paying taxes; therefore, there will be no increased revenue for the government to offset the cost of the entrenched entitlements.

The only answer is for our government to focus its undivided attention to create jobs in America by:
Putting in place programs that will be supportive of manufacturing ventures that will be competitive with those countries that have been enticing and continue to entice our entrepreneurs to leave the United States.
Reduce taxes and regulations on private enterprise to global competitive levels
Make them permanent so that investors can properly calculate the risks of making long term investments in the United States.

This must be done at once! Any elected official who does not understand this and have it as a top priority, must be removed from office as soon as possible.
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